Evening Star Newspaper, July 24, 1932, Page 17

Editorial Page EDITORIAL SECTION he Sunday Star. = Part 2—-8 Pages WASHINGTON, D. C, SUNDAY MORNING, JULY 24, 1932. Special Articles LIQUOR FOR WET STATES SEEN CAMPAIGN ANSWER Close Study of Platform Planks Indicates| Votes Will Surprise Those Expecting | Stock Pools for Recovery Can Wall Street Lift Itself Out of Depression and Start Nation on Right Paths? WAR DEBTS’ REPUDIATION 'HELD UNNEEDED IN EUROPE |Britain and France Not Facing Revolu- tion, as Did Germany—Notification of 100 Per Cent Repeal Sentiment. BY MARK SULLIVAN. | HE part that prohibition will play in this campaign is mnot vet realized. The lines it will take are just forming. Some of those lines are likely to be pretty sur-{ pgising. . | énm article is written with the aim | enlightening persons who Wish 10/ ang in’ rural parts of Northern States figure out for themselves just where the country is going on prohibition. | To any one who follows the actual developments and the actual docu- ments, as distinguished from the loose expressions of emotion on both sides, | will have little difficulty in seeing the end of the road. Persons who, whether wet or dry, take the 100 per cent repeal plank in the Democratic platform at its face walue—in the sense that it will bind the Democratic party—are going to eeriously nted. Persons who, whether dry or wet, think the eight- eenth amendment is going to be re- ealed absolutely and without qualifica- ion are going to be disappointed. the wets disagreeably, the drys agreeably— more o The action of Democratic Senator Carter Glass in proposing formally in Congress a modification—not a repeal— of the eighteenth emendment, is the most meaningful thing that has hsp- pened about prohibition in the cam- paign o far. It is far more important, more decisive about the next phase of prohibition than the 100 per cent re- peal plank which the Democratic na- tional convention adopted. Senator Glass' proposal reflects the true posi- tion of more than half the Democratic party—not more than half the voters, but more than half the Democratic party as it is now represented in Con- gress (especially the House). It reflects the Democratic party as it will be rep- resented in the next Congress, as it will be represented in whatever actual action is taken about prohibition. What Senator Glass has proposed is pretty close to the thing that Congress will ultimately do about prohibition and close to what the country will do. Opposition to Repeal. The wets may as well forget the idea that by getting a_100 per cent repeal plank into the Democratic platform they got the willingness of that party to work for unqualified repeal did not get that. They did get willingness to not to resist repeal. A full half of the Democratic party in Congress is opposed to 100 per cent repeal. This does not mean that this half of the party insists on doing nothing at all about prohibition. The party as a whole is willing to make a change. As it happens. the change which the Democratic party in Con- gress is willing to_make is practically identical with the Republican plank. Within a few weeks, a full half of the Democrats running for Congress— and more than half of the ones likely to be elected—will have disavowed the Democratic plank on prohibition and will be running on personal planks of their own. The personal planks will be | roughly identical with each other. All | And what Virginia is now doing, as reflected by Senator Glass, will be done in other Southern States, and some Western States; in many parts of States, in many congressional districts and by many candidates for Senate and House as well as many candidates for Governor and other State and local of- fices Throughout the South and West Democrats as individuals, and as State and local organizations, will be adopt- ing, publicly or tacitly, positions differ- ent from the 100 per cent wet repeal plank of the national party. They will not, except in a few cases, g0 “‘bone- dry.” They will adopt positions like Senator Glass’, willingness to have qualified repeal. The form of qualified | repeal they adopt will permit States that want liquor to have it—but always with the qualifications that there shall be no saloon, and also no shipments from wet States into dry. This function to prevent shipments and for- | bid the saloon, will, in these declara. tions, be retained in the Federal Gov-| ernment. Unsatisfactory to Some. Some wets won't like this. eral Constitution won't like it be taken by fully who will be, like Senator next Congress Glass, in the ultimately come out of Congress. Now this is not going to help the latter | Many persons having a concern for the Fed- | But that is roughly the position that will half the Democrats That. roughly. is the position of the Republican platform. And that, roughly. is the thing that will | Republicans particularly in the presi- | dential election. nor in electing mem- bers of Congress—except that it is going to appear shortly that the Re- | publican platform, much derided when | it first appeared. offers the only prac- | ticable path toward the only kind of | change in prohibition that has any | chance. What the dry the opposite. tion is precisely to prevent the Repub- getting votes in Virginia, moderately dry Virginia s to remain at once Demo- crats and moderately dry. If the Demo- crats in Virginia had not taken the attitude they are taking, if they did not disavow the 100 per cent repeal plank in the Democratic platform, they would lose some congressional seats to the Republicans._ It is precisely to pre- vent that that the Democrats are now acting. For the same purpose and with the same effect they will take the same step elsewhere. This disavowal of the Democrati~ 100 per cent repeal plank this taking of a local position for modi- fication. will result not in more Repub- lican seats in Congress. but fewer. But the sure effect of this action by local Ders¥crats, and of other con- ditions, is to make it certain that Con- gress will not be for 100 per cent repeal. It will be for modified repeal, a repeal which keeps for the Federal Govern- ment power to prevent interstate ship- Democrats are_doing | does not help the Republicans: it does When Democratic Sena- | tor Tarter Glass repudiates the Demo- | | cratic plank on prohibition, his inten- will be roughly identical with Senator | ments, and power to prevent return of Glass’ propesal, and all will be roughly identical with the Republican plank,} Their action will not help the Repub- licans in the national election—but | mest decidedly it will affect the col of prohibition in Congress. | Let us look forward to actualities ‘When the Congress about to be elected meets, the Democrats will hold a cau- cus on prohibition. In that caucus just | about half will come from Northern cities end will be wet. The other half, coming from th> South and border States and from rural districts of West- ern and Northern States. will be drv, | @ike Senator Glass—dry in the sen<e of 0] repeal, though willing to That Democratic caucus will not agree to put forward a formal pro- posal in terms of the 100 per cent wet Democratic plank. Introduction of such a proposal will split the Democratic caucus into_ two hostile camps. prac- tically equal. There is nothing that can coerce the Democratic drys into supporting 100 per cent repeal. Noth- ing can coerce Carter Glass. and as Carter Glass is so are mos: of the dry Democrats in Congress. They will take, and they already take the position, that the Democratic national platform does not bind them. If Franklin Roosevelt should be President he cannot coerce them; no President situated as he will be would try to coerce them. What will heppen will be this: In Congress as a whole someone, whether Democratic or Republican, will intro- duce a bill for 100 per cent repeal Someone else will introduce a bill for modification, following roughly the lines of Senator Glass' proposal and of the Republican platform. As between these two bills the Democrats will di- vide almost equally. To a certain ex- tent the Republicans will divide also. because just as Democratic drys are disavowing their 100 per cent repeal plank, so are some wet Republicans avowing the Republican plank for mod- ification. The disavowals in the Re- publican party, however. are less nu- merous than those in the Democratic party. The Republicans in the next Congress will in general suoport the Revublican modification plank The result when action in Congress on prohibition really comes is eas; foresee. Most of the Republicans and about half the Democra's will be just about enough to mak~ up the neceeary two-thirds. They will sunport qualified repeal. The 100 per cent repeal plank won't have a chance. The proposal that will actually come out of Congress will be a modification plank roughlv identical with Senator Glass' proposal and roughly identical with the Reoubli- | can plank. That is the direction the change will take when it comes to the actuality of statutory action. Party Not Reflected. ! It is true the Democrats in conven- tion at Chicago adopted the 100 per cent repeal plank by a majicrity of more than four-fifths—934 to 213. That did not, does not and will not reflect the Demo- | cratic party in Congress. Senator Car- | ter Glass of Virginia has already said it does not bind him and as Senator Glass | has gone publicly £o will scores of other Scuthern Democrats go publicly or tacitly. 0 The drys at the Democratic conven- tion did not put up a powerful opposi- tion for reasons too complex to Tecite here. In part, they feared that a Xnockout resistance by them to repeal might Injure thair chance to give the presidential nomination to Roosevelt. An hour after that plank was adopted, | a leading Virginia Democrat, high in public life, said in a private conversa- tion: “On that repeal plank we cennot carry Virginia for many of our con- gressional candidates and might even fail to earry it for President; w2 are go- ing to_have in Virginia a prohibition position of our own. which will be for modification but not for repeal; and we are going to make our attitude plain | fust as soon as we get home.” It is fair to essume that the modification proposal intrsduced in Congress by Sen- | £227 Tuwer Glass reflects this attitude | of his State. step further into the future. ] the saloon. Aimed at Saloon. Senator Carter Glass' proposed the wets have been saying that of course they don’'t mean to bring back the saloon. Now Senator Glass takes them at their word and proposes that the seloon shall effectively be barred by so specifying in whatever change is made in the Constitution. Senator Glass' proposal would in effect repeal ighteenth amendment, with two exceptions. First, “the sale of intoxi- cating liquors within the United States * * * for consumption at the place of sale (commonly known as a saloon) is hereby_prohibited.” Second, “the trans- portation of intoxicating liquors into any (dry) State * * * is hereby pro- hibited. In other words. Senator Glass' pro- posal would repeal the eighteenth amendment with these exceptions: It would permit any State to go wet that wants to—but Senator Glass would re- tain in the Feceral Government and in the Constitution the right and duty to do two things: First, prevent the saloon, and second, prevent shipments into dry States. ‘That is the position that mcst of the Democrats in Congress will take. That is the position, roughly, that the Republican platform takes. Because of the support of both groups, that is the change that will ultimately come out of Congress. If there were space we could go one If the saioon is to be permanently barred. it follows that the only practicable way to have liquor is through sale and manufacture by St: . The definition of the word “saloon” is, a place for the sa'e of liquor to be consumed on the premises. To this definition we may add one further clause which is commonly taken for granted. This clause is “for private profit.” It was “private profit,” the stimulaticn of sale, that made the cld saloon odious. | It will be found in the end that the only way to meet all the conditions will be manufacture and sale by such States as want to do so. There need be no surprise about this ccnclusion. This is what ex-Gov. Smith advocated m his 1928 campzign. Smith. like many cthers, had done a good deal of talking about the need of change. When he became a presidential nominee he was obliged to think the thing through and t> put his proposed change into concrete terms. He found that the only way was the way here set down—to give to wet States the right to have manufacture and sale as a State function. Anybody else who thinks the situation through, | taking into account all the limitations and conditions, will come to the same conclusion. . Turkey Puts Damper On Press Criticism | ISTANBUL, Turkey.—A new press law of Draconian severity has recently come into force in Turkey, with a double object: First, to eliminate any criticism of the government: second. to raise the moral standard of all Turkish newspapers. ‘The law provides very loosely that all newspaper editors must have a certain standard “of culture and edu- cation.” Thus the public prosecutor by defining this criterion as he chooses may cause the dismissal of almost any editor. Among the 50-odd provisions of the | aw is one forbidding anti-marriage or | birth-control propaganda (since Turkey | law s seri ing crimy statement and one toning down news of divorce and suicide cases. Editors must all be good party men. The first to be dismissed was Arif Orush Effendl, editor of the oppositionist Yarin, which had the highest circulation in Istanbul. The paper was suppressed. (Copyright, 1932.) y underpopulated). one limit- reporting to the official police j THE FLOOR OF THE STOCK EXCHANGE. | amendment is aimed at the saloon. All | BY C. NORMAN STABLER. TATEMENTS that Wall Street pirates made the billions that have been lost by investors dur- ing the last three years, that all stock brokers should be in jail, that speculation in securities is not a legitimate undertaking and. in short, that Wall Street is the source of all evil are heard on every hand and ap- parently are accepted as gospel without a challenge. It seems especially easy for political orator. ments and to co among others, the majority of the 15,000.000 of small speculators Who had accounts in brok- erage offices in 1929 and helped pile up the tower of paper profits which never existed in fact Fixing the blame after a debacle is a pastime that does little harm, but usually accomplishes less good—which probably accounts for the fact Toolish statements like the above go unchallenged. The blame that may justly be leveled at Wall Street is its buckling under to fear about the future and its failure to produce a leader or group Wwith the necessarv magnetism and power to whip the faint of heart into line. There are many of the faint of heart in Wall Street, and they are subject to the same emotions as others throughout the country, for most of them have lost their paper fortunes along with the 15,000,000 Being in Wall Street did not save them, and they are just as anxious as the rest of us for the birth of a Moses with the necessary fore- sight to point the correct course. Blaming the financial machinery for the present ills is as useless as it is unjustified. The head of a local real estate association, listening to the pop- ular clamor, said recently that the de- bacle was due to “pool” boosting and unloading and short selling aided by banking credit inflation. Pool Broke 1873 Panic. It was a major pool operation, en- gineered in Wall Street, that helped break the panic of 1873, and thus contributing to the recovery which fol- lowed that period. The fears of in- vestors and purchasers of goods helped prolong that depression, just as they are helping the forces of evil today. There are few indivicuals living who were active in the Street at that time and now but on the authority of one of the key men of the 1873 era I have and railroad presidents and a few legis- lators have been considering it for some weeks, and there is some doubt as to who was the first to promote the idea Mr. Connor does not wish it said that he is the originator. adding that “any- | thing that comes from Wall street is HUGENBERG STRIKES HARD to make such state- | that | FOR NATIONALIST REICH | that period we had labor strikes which Press and Film Magnate Uses Enormous distrusted the credit.” The veteran trader thi that the depression which followed the panic of 1873 was in many respects more severe than that of today. He regards timidity as one of the causes for the prolonging Power to Sway German Election Next Sunday. BY C. PATRICK THOMPSON. | HE scene is studio No. 3 of the great UFA film plant at Neu- babelsberg, outside Berlin. Pro- duction is in full blast. The star weeps softly. Everything is pianissimo. A falling pin would dis- turb the tension. | Suddenly, into this emotional silence a strange sound intrudes—the sound of creaking boots. The heroine has lost her pose without catching sight of the disturbing cause. But the enraged di- rector. glaring into the outer gloom. perceives an insignificant looking man of indeterminate age. distinguished by a scrubby mustache that is pathetically trying to curl in the Prussian warrior- caste manner, one of those atrocious ties which only the German bourgeois dare to perpetrate, and boots which creak without their owner's apparently being aware of the noise. “Devil take it!" cries the director. “What has to do here this budiker? And indeed the intruder, this small fel- Jow, does bear a striking resemblance to | the budiker of Berlin slang—the owner of a very little and unimportant shop. Reveais His Identity. But before the outraged UFA poten- tates can drive away this singular ap- parition. a husky volce emerges from under the ludicrously bristling mus- | learned that it was the operation of |taches: that much maligned speculative vehicle, the pool, which started rolling back the clouds of despondency of that time. ‘Washington E. Connor is my inform- ant. He was on the center of the 1873 was Gould's principal broker and han- Stock Exchange. He also handled much of the trading of | Russell Sage. Needless to say, his pres- ent operations are not as gigantic and he is no longer a member of the ex- change, but he still conducts consider- able trading from a broker's offices. It is his statement that a pool operated by Wiliam H. Vanderlip, Charles J. Osborn, Frank Work and about 10 or 12 of their associates started the recov- ery in Wall street, which later became the business recovery of the Nation. Mr. Connor thinks that the method used by Gould in amassing the first part of his tremendous fortune could be ap- olied on a broader scale today for the direct benefit of corporations instead of for any one or a half dozen individuals. Gould made his first “kiiling” by buying railroad bonds at their ~depreciated Mr. Connor would have the railroads | preciated prices, thus permanently re- ducing their fixed charges, improving their credit and teking advantage of a | situation which in 1873 was used for | individual profits. The suggestion is not mew, nor is it applicable only to railroads. Bankers prices of about 2) cents on the dollar. | | buy their own bonds at the present de- | ~I am Hugenberg.” This anecdote of the first visit of the | owner of the great UFA film concern | | to his plant puts a spotlight upon the | r phencmenon of Dr. Alfred | | stage as the partner of Jay Gould, He ‘iifig‘e‘l?m;.’ i ed | child clan, center of European high | It focuses, in action and in one dled his operations on the floor of the | scene, the omniscience, the physical in- | : parceled out | significance, the sensitiveness, the tor- | Gould's business to other brokers and | fuous secrecy, the unceremoniousness, the loneliness, the inquisitiveness and the acquisitiveness of the German Nationalist chief, who, in pursuit of his uncompromising warfare upon socialism, | internationalism, the League of Nations, the Versailles Treaty, atheism and in- | tellectual Bolshevism, has made himself master of the biggest and most effective engine of publicity in the German Reich. In his youth he was a poet and liter- ary dilettante. In his middle twenties he was pursuing an acadergic career and cutting his eye teeth in politics. Be- tween 26 and 40 he was in the public service and pushing ahead at speed. Thence he jumped off into industry and | big business. It is not until toward the | end of the World War that he ceased to be an indusirial executive and devoted himself exclusively to politics and propaganda. His Father Was Weaithy, Hugenberg was born in Hanover 67 years ago, the son of Karl Hugenberg, a counselor of the treasury, who amassed a considerable fortune. He was, obvi- ously, not cut out for a military career; he was under no pressure to earn the N means of living early in life. After leaving college he studied for the bar at the Universities of Gottingen, Heidel- berg and Berlin At 26, having completed his education with Teutonic thoroughness and with paternal political and social pull to help him, he entered the state service in an administrative capacity as deputy of the Landrat of the Krels Wesel. Three vears later he was made_a member of the Commission for Settle- ment in Posen, an important event in his life. He examines the land que: tion, demands—as befits a good pan- German and traditional conservative— expropriation of the Polish landed pro- prietors. The bridge made over which he now passes to the private or- ganizations of German agriculture. A sound Prussian of the right type and caste, who seems to know his stuff. He is made general manager of the several agricultural banks in Posen. Fast prog- | ress, in the Germany of his time, for a young man in his middle thirties. Takes Financial Post. He celebrates his 38th birthday by returning to the public service in Prus- sia, rises to be gehimer finanzrat (a ost peculiar to the old regime: the literal translation is “secret councilor of the finances”) and then succumbs to an offer from the Mountain and Metal Bank of Frankfurt to join it as director. Again the curious path of his life takes a sharp turn, broadens out. bringing new opportunities and new vistas. In Frankfurt, home of the Roths- finance of that day. he impressed them to such an extent that he made a mar- riage—very useful to him in his sub- sequent career—with the daugiter of the Oberburgermeister, and inside two years was made chairman of the board of directors of Krupp of Essen, Ger- | many's biggest and most important heavy industrial combine, and the larg- est arsenal in Europe. He was 44. In the industrial and banking world of Germany the active young head of Krupps got the reputation of being a go-getter, but rather reckless. Trade unions, a mnovelty in Hugen- berg’s youth, an established fact in his middle life, were growing, stretching their limbs like giants awakening to & realization of power and potentialities. The new head of Krupps, accustomed to a caste system and the habit of au- thority, ran up against the labor unions from the start. One requires little imag- ination to deduce the effect of this clash upon such a man. the union leaders sharply and inflexibly. The war came. The Krupp pla went into intensive production and e panded mightily. One would have thought that Herr Direktor Hugenberg | | would have had his work cut out look- ing after the affairs of the arsenal, the chiet source of war supply for the be- (Continued on Third Page.) some one eise better have | | of money av He opposed | —From a Lithograph by J. W. Golinkin. CAN THE NATION'S RECOVERY BE STARTED HERE? says there is plenty and the problem is to bring it out of hiding; that our rail- roads are our most important industry that our Government should select e: perts instead of politicians for the semi- governmental jobs such as the Inter- state Commerce Commission and_the Federal Reserve Board, and that Wall street misses “iron hand” type of leadership such as was displayed with great public benefit by the late J. P. Morgan and George F. Baker. “There were a great many securities in 1873 for which no market could be obtained.” Mr. Connor said. “And in of the present era were followed by destruction of prop- erty. We had bread lines and soup kitchens.” The first move toward improvement came when Mr. Vanderlip and his as- sociates began to buy Chicago & North- western stock and gradually to advance the price. “After they had been at work for about three weeks” said Mr. Cennor, “Jay Gould, seeing the effect they were having, started his Union Pacific, and as these two stocks were advanced it encouraged others to take up lines of stock in which they were interested. The market began to show general im- provement “Mr. Gould. realizing that there was great timidity upon the part of a number of persons, decided to sell puts on Union Pacific. so that the buyers would know that their losses were lim- ited.” Under_this arrangement the buyers of Gould's puts had the option of put- ting their blocks of stock to him at a specified price within a certain period of time. Thus they were insured arainst unlimited loss. provided Gould was solvent, and Gould would encoun- ter no loss on the puts as long as he kept his stock moving above the option ce. “By 1879 Mr. Connor continued, “came the resumption of specie pay- ment. This added to the hopeful feel- ing which had been developing. Be- tween that period and 1886 Jay Gould made nine-tenths of the fortune which he left when he died. “Independent of his Union Pacific, he started to buy bonds of the Kansas Pa- cific road, which were selling between 8 and 12. He followed the price up to about 40 and in six months' time he had control of more than two-thirds of the total bond issue of that road. He reorganized the property and finally closed out with & profit of something more than $10,000,000. Acquired Other Properties. “During the period from 1878 to 1886 | he acquired control of a number of | other railroad properties, such as the Southern Pacific. _Missouri-Kansas- Texas, Texas & Pacific. Iron Mountain and Wabash. He built the American | Union Telegraph lines, built the cable company, consolidated American Union Telegraph with Western Union Tele- graph and acquired control of Western Union. “In building extensions to the rail- road lines which he bought and in building the American Union Tele- graph and his cable company, he formed what were called construction companies which raised the cash for these activities. After the first con- struction company had been closed out at a profit of 50 per cent to the sub- scribers, Mr. Gould had no difficulty in raising any amount of money for the other companies. Every one of these construction companies paid very handsome returns, the largest profit | being 150 per cent.” This was a period when great per- sonal fortunes were made. John Kennedy, according to Mr. Connor, made his fortune by buying Northern Pacific stock when it was selling around 5. Some of this stock was in his possession when the corner took place and it sold at 1,000. Thelr foresight in buying depreciated < BY FRANK H. SIMONDS. | FTER more than two weeks of | turmoil following the making of | the Lausanne agreements cer- tain facts are beginning to | emerge. It is plain, for ex- | ample, that the unhappy statesmen of that great conference were always be- tween the devil and the deep blue sea. And, as the United States was the devil. their home publics were the sea—and the latter was very much, closer at the moment. They had immediately to end the | whole reparations mess for two reasons, | | the first financial and the second polit- |ical. The financial reason was that | | while it was obvious no more money | could be had on account of reparations, | the existence of the claim was steadily | impairing the value of some billions of | private debts owed by Germans to vari- | ous foreign investors. If there was | money enough likely to be found in | Germany to pay anything, it was these private debts that alone could bg saved. ’ On the political side the exisfence ct a claim against Germany based upon | defeat in war and envenomed by the guilt clause of the treaty of Versailles | was playing into the hands of the | Fascist party, which is seeking to over- | turn orderly 'government in the Reich | and establish’ a dictatorship. Thus, | alike to save the private debts and to | save ordinary government, in Germany, the statesmen of the Lausanne Con- ference had to put en end to repara- | tions. i On the other hand, their own home | publics were not satisfied that they | could not get cancellation from Amer- | ica. Not being satisfied, they would | not forego reparations outright uniil the war debt matter was disposed of. These publics reasoned, not without logic, but tctally without information J an investments, to save these she would be willing to drop her deit | claims. “Sunk” Reparations. ‘The statesmen of Lausanne knew bet- ter—that is, on the assumiption that they were statesmen at all. For nothing | could have been clearer after the Hoover | mcratorium debate in the Senate than that canceliation or even revision was out of the present reckoning. But be- | cause of domestic public opinion the | best they could do was to take repar | tions out in a boat to the middle | Lake Geneva and then sink them at- | tached by a string to a float. They didn't dare to sink them altogether. ion th | hoisted to the surface at any moment They all knew better. They all recog- nized "that reparations belonged with { Fenian bonds. But their pressed pub- | lies kept saying. “Don’t let go until America « ‘comes through,’ because if | you do we shall have to pay America out of our own pockets.” When it is at last plain that America won't cancel | and won't revise the war debts, some dark night a great European statesman will slip down the funicular to the Ouchy dock, row out to the float, and cut the string. And that will be the legal end of reparations. Meantime, to save themselves at home the Furopean statesmen have to keep up the fiction of American generosity until their publics get used to the end of reparations. They know that there is nothing the President can do. since Congress will decide. They know that with an election coming on no one will talk debts before the vote. Payments come due on December 15. But as the fond mother sings songs to make the baby take his bottle, European states- men are talking American generosity to get the Lausanne agreement down the throats of their public. There is, moreover, no reason for American action on debts now. because failure to act, while it will disappoint Europe, will not disturb the economic or financial situation of the world in the least. The existence of war debts does not threaten to produce a revolu- tion in Britain or Prance, as the exist- ence of reparations did'in Germany The only earthly trouble that these | debt claims can make is if payments | were made in such a way as to disturb the ordinary flow of trade and com- merce, and therefore the normal state of finance. And today that problem does not arise. One Course Is Open. | One may assume that since the Euro- pean debtors have just been forced to abandon all hope of coilecting $10,000,- | 000,000 from Germany, they will be cor- respondingly less able to pay the same sum, or installments on the same sum. |to the United States. In that case their only course is to notify the United States that owing to their temporary difficulties they cannot reet their debt securities when the clouds were dark- | est could be followed by the corpora- tions themselves now, Mr. Connor be- | lieves, although it is possible that in| the case of the railroads some legis | 1ation would be necessary. “The proposition which has been put | | out,” he said, “would be immediate in | its ‘effect, and it has already had the | approval of a number of interests. It |is that the railroads should buy up their low-priced bonds, either directly |or through the Young Committee Take, for instance, the buying of a bond at 20 when the compeny is paying interest on a par value of 100. There will be a saving immediately, definite and permaner:t. “The rellef that is being given the railroads now to meet their interest charges is simply temporary: it tides | them over for a short period only. But this other plan permanently reduces their fixed charges. ! “The railroads are our most important industry. Their securities are held by millions of our people. They are large | consumers. They are large employers | ot labor. Politicians, through the re- | capture law, prevented their accumu lating a reserve in times of prosperits |'to carry them through a period of de- | | pression. They are large taxpayers and | as such they have helped to pay for | highways used by competing buses and | freignt vans, which are not taxed. | “The government, through the Young Committee or some similar agency. could help them to purchase their low- | priced bonds. By paying interest on the | purchase price they could largely and | permanently relieve themselves of fixed charges and thus, in many cases, pre- vent receivership.” Mr. Connor believes | in mergers. He told me: “Harriman tried to strengthen our| raflroads by mergers. The politicians | would not permit it. Now they see the | necessity of it. Our public utilities are | | proving the benefits of mergers to both | consumers and stockholders. The neces- | sity of co-operative instead of destruc- tive competition has been demonstrated. | Yet the Sherman law remains upon our books iccess should not be a crime, and | yet many politicians would have it re- garded as such. It is time to have con- structive forces at work, and not de- |structive ones.’ \ | have cleaned up the refuse in Inability to Pay Only Safe Recourse. in full for this year, or that they can- not meet it at all. In such case what can the United States do? Patently, nothing at all but grin and bear it. On the other hand, no issue of repu- diation arises. The debtor simply can- not meet his note on the due date. Next year it may be better or it may be worse. No one can tell, and there is not the smallest reason for anticipat- ing the situation, since there i no rial hardship in postponing decision. One, two or three years from now we shall | all, beginning with the Senate. more about the whole world g; Naturally the debtor peoples wouid like cancellation. So would eve er who bought his place on a mo: in the boom days. So would every debtor in the world in view of the pres ent state of things. And so, quite obvi- cusly, may all debtors c ) by the normal route of ban commodity prices dc nitely. But there i reason to an- ticipate all that, ei war dedts or private mortgag It will be very hu European governments Washington that they their notes on December be disappointing to Washington get the money. But there is the fact From now on the debtors are only go- ing to pay what they can pay out of their own resources. The period of American private loans to Germany_to pay American public claims upon Eu- rope is over, one hopes for good. As far as a personal opinion goes 1 do not believ ury will ever collect anything value from war debts. In the end i seems unlikely that the European peo- ples will consent to go on pa now that Germany has quit. The British may pay something. But no ration i going to repudiate the debt: or next or at any time as I obviously cannot pay them. becau: pudiation is an ugly word and n nice process. Neither, however, natlons going to pay America says there 1s no legal con- nection between debts and repa That is true. Europe says that t debtor nations who were creditors o Germany and cannot now collec thing from the Reich are less we to meet the American debt—and tha is true also. But where the Serate right bevond cavil is in that it is for the Europe: make their own pr channels and not Amer sort of alleged settlement wit] gard to the facts. What Europe is asking in fact is not that the United States shall n payment of impossible sums not enforce payments—but all spare their feelings b g upon them a _definitive claim. What they ca. pay in any event t feel that they would not have to say they are temporarily embarrassed and must acknowledge inability to remit! That is not a fair request. It only urfair in equity. but it pendously foolish politically psychology because it makes the creditor angry instead of moving him to mod- eration. It means practicaliy that in- stead of accepting the inevitable, with resignation, when that inevitable occurs in December and no money is forth- coming public sentiment in’ this c try will be angry and critical. People will feel that something “his been put over on them" because of the cancella- tion_agitation. All the talk about the enormous benefit to be obtained by abolishing debts is, frankly, just so much “bunk Because only the paying cof debts can produce harm and no one will here- after pay debts save as they can safely do so. Eventual revision must come if experience proves that the present eco- nomic and financial situation in the world is to continue Cancellation under those conditions will, in fact. be automatic and without benefit of Sen- ate. But we are not there yet. Entitled to See Facts. What is necessary now is time enough to prove to the satisfaction of the American people whether the European debtors can pay anything in the future ; . how much. The American people are entitled to a chance to see with their own eyes what the facts are. precisely as European peoples took their own time to discover the truth about reparations. There is no reason why they should be hustled or hurried into any cancellation agreement. And no good reason can be alleged for any haste. Talk about the benefit to the world of clearing up the mess is not very convincing, because the mess is not affected by debts that are legal but at_the present time ere not being met President _Hoover gave European statesmen a moratorium ard they have employed it, somewhat tardily. to clean up the Ger mess. But they have attached a string to their lement and now suggest that the President do something more for them because they their own back vards on American time. And that, after all, is both unreasonable and a bit irritating. After 13 years Euro- n expectation of large American ges- tures on alternate Wednesdays and Fri- days does become a bit tiresome. Whatever happens, the Eurovean creditors of Germany are not going to try to start reparations all over again, just as they are not going to trv to start the war over again. Whether we cancel the debts or not. that ue is settled. What remains is for them to tell us in December what they can pay us this year, if anything, and why they can't y more. showing their books as an evidence of good f2ith. And we can be reconciled or furious as we choose. But business will not be hurt, finance will not suffer. recovery will liating for the have to tell are | not be postponed because honest debt- ors cannot at the moment meet their | legal obligations and cannot say when, if ever, they can. If that were the | case, where would any business in the world be today? (Copyright. 1932.) China Province Holds 300 Years’ Oil Supply SHANGHAI China—Distant Shensi Province has enough oil to last the world for 300 vears, according to an optimistic report submitted to the Nan- king government. With China import- ing $25000,000 worth of liquid fuel annuaily, the report has aroused much interest at the capital. The ministry of industry has written the heads of the Shensi provincial reconstruction bureau for further particulars. Shensi is one of the least accessible provinces of China and is long known 2s the home of starvation for millions of Chinese. A narrow-gauge railroad connects its one large city with the Peiping-Hankow line and is about its only contact with the outside world. The warlord who bullt the narrow- gauge line did so on purpose: that is, to check invading warlords. The fdem being that the less means of commusi- cation there were into the province the less likelihood it had of being disturbed. (Copyright, 1932.) L]